Proposal regarding changed rules on Swedish R&D tax relief

The R&D tax relief rules were introduced in 2014 and aim to increase business investments in research and development. In short, the rules mean that an employer may reduce employer’s contributions on salaries to employees working with R&D by 20% of the salary, up to a relief limit of SEK 36 million per annum per group. The relief is generally claimed in the monthly employer’s tax return.

At the time of introduction of the R&D tax relief rules, one of the objectives was for the rules to be simple and clear. However, the inquiry found that the rules have proved to be difficult to interpret and apply, for businesses as well as the Swedish Tax Agency. According to the inquiry, the difficulties are largely due to the unclear definition of development in the rules which makes it difficult to assess whether the conditions for relief are met. Further, the lack of clarity has meant that businesses must submit extensive documentation to prove their right to tax relief. Based on these difficulties, the inquiry has considered several amendments of the rules. Below is a short overview of the proposed amendments. 

The maximum possible R&D tax relief, SEK 36 million per annum per group, is proposed to remain unchanged.

A person is currently required to perform R&D work for at least 15 hours in a given month to be eligible for R&D tax relief. Since the requirement generates administrative work for businesses and fulfils no function in the application of the rules, the inquiry proposes that it should be abolished.

The inquiry proposes to remove the current requirements for research and development work to be systematic, highly skilled and development to be based on the results of research. The inquiry has found that these requirements have contributed to documentation difficulties and led to difficulties in the application of the law.

The inquiry also proposes further changes to the definition of development. A purpose of developing or improving products should be sufficient, rather than developing new or significantly improved products. 

It is proposed that the amendments enter into force on 1 January 2026. The amended R&D tax relief rules will mainly apply to remuneration paid after 31 December 2025.